Womack’s Internet Sales Tax May Be On Lame-Duck Menu

Saturday

Aug 2, 2014 at 6:31 AM

WASHINGTON — Senate Majority Leader Harry Reid appears to be laying the groundwork for Congress to vote, after the November mid-term elections, on a bill that would require online merchants to collect sales tax receipts on Internet purchases.

WASHINGTON — Senate Majority Leader Harry Reid appears to be laying the groundwork for Congress to vote, after the November mid-term elections, on a bill that would require online merchants to collect sales tax receipts on Internet purchases.

The Senate approved its version of the Marketplace Fairness Act more than 14 months ago by a vote of 69-27 but action has stalled in the House where a similar bill sponsored by Rep. Steve Womack, R-Rogers, is stuck in the Judiciary Committee.

To break the gridlock, Reid apparently plans to attach the Marketplace Fairness Act to another bill that would extend an expiring prohibition against taxes on Internet services and email. The House recently approved by voice vote a permanent extension to the 1998 Internet Tax Freedom Act, which is now before the Senate.

Merging the two bills would be put off until after the November mid-term elections when Congress meets in a lame-duck session. In the meantime, Reid announced Thursday that the Senate would consider a two-month extension of the law when they return in September from a five-week recess.

Proponents of the Marketplace Freedom Act say the short-term delay in merging the bills is simply a matter of scheduling and expect the two issues will be joined for a long-term fix later in the year.

"Given the abbreviated floor schedule in the weeks ahead, this short-term move isn’t a surprise. But, it is clear there is overwhelming bipartisan support for moving both together," said the Marketplace Fairness Coalition in a statement.

The coalition, whose members include the National Retail Federation, Wal-Mart Stores, Amazon and hundreds of other businesses and groups, said a long-term extension of the Internet Tax Freedom Act has to include the Marketplace Fairness Act to keep the Internet "tax-free and protect local jobs."

Womack would prefer the House and Senate negotiate a final version of the Marketplace Fairness Act, but that requires the House Judiciary Committee to act — something Womack says his gut tells him will not occur.

"They’ve already slow-walked this thing. I mean they’ve had it for over a year already, there is no sense of urgency," Womack said. "So we may be forced to accept what the Senate sends back to us, and that is probably going to be the Senate version of the Marketplace Fairness Act."

Womack said his understanding is the Senate will approve a combined bill that offers a longer extension of the tax ban on email and Internet services along with the bill requiring most online merchants to collect tax receipts on Internet sales.

Womack and other proponents of the bill say the legislation is would remove an unfair advantage that online merchants have over brick-and-mortar retailers who are required to collect sales taxes. And, it would increase revenue to cities, counties and states from sales taxes on online purchases that are owed but not remitted.

Opponents say the bill represents a tax increase and an onerous burden on small Internet merchants who would have to collect taxes for thousands of tax districts.

Sen. Ted Cruz, R-Texas, complained on the Senate floor that Wyden’s bill to permanently extend the Internet Tax Freedom Act was being "held hostage" by supporters of the Internet sales tax bill. While both bills concern Internet taxes, Cruz said they are very different — one is a popular effort to prevent states from imposing taxes on Internet service while the second is an unpopular proposal to require small retailers to collect state sales taxes.

"Even though there is no serious objections to the Internet Tax Freedom bill we are unfortunately seeing our colleagues from the Democratic side of the aisle hold that bill hostage in an effort to force through the Internet sales tax," Cruz said.

Holding off a vote on a merged bill until after the November mid-terms, Cruz said, is being done to skirt voter accountability. When the short-term extension of the Internet Tax Freedom Act expires during the lame-duck session, Cruz predicted a "bunch of members who have been defeated and won’t face voters again" will come together to approve the Internet sales tax.